Finning bulldozes into B.C. mining with Bucyrus deal

Finning International’s purchase of parts of the former Bucyrus International’s mining equipment distribution business will mean more jobs in B.C., Finning president and CEO Mike Waites said.

“We’ve been hiring significantly in B.C. and expect to continue to do that as there are tremendous mining opportunities in the province … and now there’s an even stronger case as we will be able to provide a full product line of mining equipment,” Waites said.

The Vancouver-based equipment dealer will pay $465 million to Caterpillar to acquire Bucyrus operations in parts of South America, Canada and Britain. Caterpillar bought Bucyrus last year for $8.8 billion US.

For Finning, the single largest near- to midterm benefit of the deal is access to hydraulic shovels and cable shovels, Waites said.

“It is a key part of the mining solution,” he said. “They work with our large mining trucks for hauling. We can now provide the shovel and the truck, match the capacities, support both and work with the customer,” for maximum benefit.

“We see this as a game changer for our customers and for Finning,” Waites said.

“When you have an opportunity to increase business by 25 to 30 per cent with one step, it’s a tremendous opportunity and a tremendous opportunity for Finning and also for our customers.”

About 900 former Bucyrus employees are expected to join to Finning as part of the deal. Of those, 250 will be in Canada, with most deployed to Alberta and some to B.C., Waites said.

“I’m very confident in saying this is directionally positive for B.C. and B.C. employment,” Waites said.

This is the second major announcement of a series of deals expected to transition the product distribution and support of former Bucyrus machinery to Caterpillar dealers. In December, Caterpillar sold the Australian, Papua New Guinea and New Caledonia portion of the Bucyrus distribution business to Sime Darby Industrial. Bucyrus specialized in surface and underground mining equipment for extracting coal, copper and other minerals.

Finning, the world’s largest Caterpillar equipment dealer with key markets in Western Canada, Britain and Chile, sees its purchase as a wager on sustained Asian demand for commodities ranging from base metals to met coal to oil, among other resources.

“We have a very bullish outlook generally on commodities,” Waites said.

Shares in the Vancouver, British Columbia-based company rose seven per cent to $26.10 on the Toronto Stock Exchange after the deal was announced.

“I would describe the price as good value for Finning shareholders and we fully intend and are able to finance it with debt at very attractive rates,” Waites said.

The business that Finning is buying has annual revenues of about $600 million.

Finning was founded in Vancouver by Caterpillar dealer Earl B. Finning during the Great Depression in 1933 with six employees. During the recession of the early 1980s, it expanded into England, Wales and Scotland and now operates on three continents supplying equipment to used in mining, forestry, construction, pipeline and oilfield construction, agriculture, marine, transportation, fisheries, government and commercial transport.

With files from Reuters

jennylee@vancouversun.com

Blog:vancouversun.com/smallbusiness

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Finning bulldozes into B.C. mining with Bucyrus deal

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